Exhibit 10.5


 


NEW YORK & COMPANY


450 West 33rd Street


New York, NY  10001


 


 


 




	
  Mr. Steven Newman

  
	
  405 West 23rd
  Street, Apt # 8E

  
	
  New York, NY 10011

  
	
   

  
	
   

  
	
   

  	
  Re:  Letter
  Agreement of Employment

  
	
   

  
	
   

  
	
  Dear Steve:

  






 


 


This letter agreement (this “Agreement”)
sets forth the terms and conditions of your employment, and your employment
relationship, with Lerner New York, Inc. (the “Company”).  Your execution of this Agreement will
represent your acceptance of all of the terms set forth below.


 


1.             Nature of Agreement and Relationship.  This
Agreement does not represent an employment contract for any specified
term.  Your employment
relationship thus will remain "at-will," meaning that, subject to the
terms hereof, either party to this Agreement may terminate the employment
relationship at any time for any lawful reason.


 


2.             Job Title and Duties.  Your job title will be Executive Vice
President, Merchandising.  You will be
expected to devote all of your full time efforts to the performance of the
duties and responsibilities normally associated with this position, including
those from time-to-time that may be assigned to you by the President, the Chief
Executive Officer, the Chief Operating Officer or the Board of Directors of the
Company (or its designee).


 


3.             Salary.  For the 12-month period ending on the last
Saturday of each January (the last day of the fiscal year), you will receive a
base salary at the rate of $535,000 per annum (“Base Salary”), subject
to the remaining provisions of this Section.  
For the remainder of the current fiscal year starting on the date of
this Agreement, your Base Salary will be pro rated based on the number of days
remaining in such fiscal year divided by 365. 
At the Company’s sole discretion, which it will exercise in good faith,
your Base Salary may be increased or decreased based on your performance and
the performance of the business.  You
will be paid in accordance with the Company’s normal payroll policies and
practices, with all applicable deductions being withheld from your paychecks.


 


4.             Bonus.  You will be eligible to participate in
the Company’s then current bonus plan, in accordance with its terms and
conditions, and to receive performance-based bonuses pursuant to any formula
that may be established.  For the
Company’s current fiscal year, your bonus target for the spring bonus (relating
to the Company’s results for the first and second fiscal quarters of each
fiscal year) will be 28% of your Base Salary and for the fall bonus (relating
to the Company’s results for the third and fourth fiscal quarters of each
fiscal year) will be 42% of your Base Salary. 
Any bonus will be payable in the month following the last quarter to
which that bonus relates.  All bonuses
are determined at the Company’s sole discretion, and the Company has the sole
discretion to modify or terminate any bonus plan.


 


5.             Stock Options and Other Long-Term
Incentives.  You will be
eligible to receive awards under stock option, restricted stock or other
equity-based long-term incentive plans established by the Company (or an
Affiliate) that cover executive officers of the Company.  The term “Affiliate” means any
corporation, partnership, limited liability company or other entity (other than
the Company) that controls or is controlled by the Company, whether directly or
indirectly, such as a parent company or subsidiary.


 


 


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6.             Employee Benefits.  You will be entitled to participate in all
employee benefits plans, practices and programs maintained by the Company and
made available to senior executives generally and as may be in effect from time
to time (the “Benefits Plans”). 
Your participation in the Benefits Plans will be on the same basis and
terms as are applicable to senior executives of the Company generally.  Benefits Plans include, but are not limited
to, savings and retirement plans, deferred compensation, health and
prescription drug benefits, disability benefits, other insurance programs,
vacation and other leave, merchandise discounts and business expense
procedures.  Plan documents setting
forth terms of certain of the Benefits Plans are available upon request, which
plan documents control all questions of interpretation concerning applicable
Benefits Plans.  The Benefits Plans are
subject to modification or termination by the Company at any time, at its sole
discretion, in accordance with their terms.


 


7.             Severance Pay..  Upon your termination of employment by the
Company and all Affiliates without Cause (as defined below), but subject to
your performance of all post-employment obligations set forth in this
Agreement, you will be entitled to receive severance pay for twelve (12) months
at your final rate of pay (“Severance Pay”). This Severance Pay, which
will be subject to applicable deductions required by law, will be paid on the
Company’s regular payroll dates for the twelve (12)-month period following your
termination date.  For purposes of this
Agreement, “Cause” means: (i) your wrongful misappropriation of the
Company’s or an Affiliate’s assets of a material value; (ii) any physical or
mental impairment that renders you incapable of performing the essential
functions of your position with reasonable accommodations; (iii) your
conviction of, or pleading “guilty” or “no contest” to, a felony; (iv) your intentionally
causing the Company or an Affiliate to violate a material local state or
federal law in any material respect; (v) your willful refusal to comply with a
significant, lawful and proper policy, directive or decision of your supervisor
or the Board in furtherance of a legitimate business purpose or your willful
refusal to perform the duties reasonably assigned to you consistent with your
functions, duties and responsibilities, in each case, in any material respect,
and only if not remedied within thirty (30) days after receipt of written
notice from the Company; or (vi) your breach of this Agreement, in any material
respect, not remedied within thirty (30) days after receipt of written notice
from the Company.


8.             No Mitigation Required.  You shall not be required to mitigate
the amount of any Severance Pay provided for in this Agreement by seeking
employment or income from sources other than the Company or its Affiliates, and
no such Severance Pay shall be offset or reduced by the amount of any compensation
provided to you in any subsequent employment.


9.             Confidential Information,
Intellectual Property.


9.1           Confidentiality. 
You agree to not disclose, distribute, publish, communicate or in any
way cause to be disclosed, distributed, published, or communicated in any way
or at any time, Confidential Information (as defined herein), or any part of
Confidential Information, to any person, firm, corporation, association, or any
other operation or entity except on behalf of the Company in performance of your
duties and responsibilities for the Company, and then only in a fashion
consistent with protecting the Confidential Information from unauthorized use
or disclosure, except as otherwise approved by the Company.  You further agree not to use or permit the reproduction
of any Confidential Information except on behalf of the Company in your
capacity as an employee of the Company. 
You agree to take all reasonable care to avoid the unauthorized
disclosure or use of any Confidential Information.  You assume responsibility for and agree to indemnify and hold
harmless the Company from and against any disclosure or use of the Confidential
Information in violation of this Agreement.


 


9.2           Confidential Information.  For the purpose of this Agreement, “Confidential Information”
shall mean any written or unwritten information which relates to and/or is used
in the Company’s business (including, without limitation, information related
to the names, addresses, buying habits and other special information regarding
past, present and potential customers, employees and 


 


 


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suppliers of the Company;
customer and supplier contracts and transactions or price lists of the Company
and suppliers; all agreements, files, books, logs, charts, records, studies,
reports, processes, schedules and statistical information relating to the
Company; all products, services, programs and processes sold, and all computer
software licensed or developed by the Company; data, plans and specifications
related to present and/or future development projects of the Company; financial
and/or marketing data respecting the conduct of the present or future phases of
business of the Company; computer programs, computer- and/or web-based training
programs, systems and/or software; ideas, inventions, trademarks, business
information, know-how, processes, techniques, improvements, designs, redesigns,
creations, discoveries and developments of the Company; and finances and
financial information of the Company) which the Company deems confidential and
proprietary, which is generally not known to others outside the Company, or
which gives or tends to give the Company a competitive advantage over persons
who do not possess such information or the secrecy of which is otherwise of
value to the Company in the conduct of its business regardless of when and by
whom such information was developed or acquired, and regardless of whether any
of these are described in writing, copyrightable or considered copyrightable,
patentable or considered patentable. 
“Confidential Information” shall not include general industry
information or information which is publicly available or otherwise known to
those persons outside the Company working in the area of the business of the
Company or is otherwise in the public domain without breach of this Agreement
or information which you have lawfully acquired without an obligation to
maintain the information in confidence from a source other than the
Company.  “Confidential Information”
specifically includes information received by the Company from others,
including the Company’s clients, that the Company has an obligation to treat as
confidential and also includes any confidential information acquired or
obtained by you while in the employment of any of the Company’s subsidiary or
affiliated companies or any company which has been acquired by the Company.


 


9.3           Invention Ownership.  With respect to information, inventions and discoveries
developed, made or conceived by you, either alone or with others, at any time
during your employment by the Company and whether or not within normal working
hours, arising out of such employment or pertinent to any field of business or
research in which, during such employment, the Company is engaged or (if such
is known to or ascertainable by you) is considering engaging, you agree:


 


                (a)           that
all such information, inventions and discoveries, whether or not patented or
patentable, shall be and remain the sole property of the Company;


 


                (b)           to
disclose promptly to an authorized representative of the Company all such
information, inventions and discoveries and all information in your possession
as to possible applications and uses thereof;


 


                (c)           not
to file any patent applications relating to any such invention or discovery
except with the prior consent of an authorized representative of the Company;
and


 


                (d)           at
the request of the Company, and without expense to you, to execute such
documents and perform such other acts as the Company deems necessary, to obtain
patents on such inventions in a jurisdiction or jurisdictions designated by the
Company, and to assign to the Company or its designee such inventions and all
patent applications and patents relating thereto.


 


 


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Both the Company and you
intend that all original works of authorship within the purview of the
copyright laws of the United States authored or created by you in the course of
your employment with the Company will be works for hire within the meaning of
such copyright laws.


 


9.4           Confidentiality of Inventions; Return of Materials and
Confidential Information.  With
respect to the information, inventions and discoveries referred to in Section
9.3, and also with respect to all other information, whatever its nature and
form and whether obtained orally, by observation, from graphic materials, or
otherwise (except such as is generally available through publication) obtained
by you during or as a result of your employment by the Company and relating to
any product, service, process, or apparatus or to any use of any of them, or to
materials, tolerances, specifications, costs (including manufacturing costs),
prices, or to any plans of the Company, you agree:


 


                (a)           to
hold all such information, inventions and discoveries in strict confidence and
not to publish or otherwise disclose any thereof except with the prior consent
of an authorized representative of the Company;


 


                (b)           to
take all reasonable precautions to assure that all such information,
inventions, and discoveries are properly protected from access by unauthorized
persons;


 


                (c)           to
make no use of any such information, invention, or discovery except as required
or permitted in the performance of your duties and responsibilities for the
Company; and


 


                (d)           upon
termination of your employment by the Company, or at any time upon request of
the Company, to deliver to the Company all graphic materials and all
substances, models, prototypes and the like containing or relating to
Confidential Information or any such information, invention, or discovery, all
of which graphic materials and other things shall be and remain the sole
property of the Company.  The term
“graphic materials” includes letters, memoranda, reports, notes, notebooks,
books of account, drawings, prints, specifications, formulae, data printouts,
microfilms, magnetic tapes and disks and other documents and recordings,
together with all copies thereof.


 


9.5           Duration of Obligations. 
The obligations under Sections 9.1, 9.3 and 9.4 hereof shall remain in
effect throughout your employment by the Company and ever thereafter,
unaffected by any transfer(s) between the Company and its affiliate(s), and
without regard to the reason for termination of such employment.


 


 


10.           Non-Solicitation.  Regardless of whether you are eligible to
receive Severance Pay, you agree that, if your employment with the Company
ends for any reason, you will not, for a period of eighteen (18) months
following such termination of employment, (i) directly or indirectly, either
for yourself or for any other person, business, company or entity, hire from
the Company or any Affiliate, or attempt to hire, divert or take away from the
Company or any Affiliate, any of the business of the Company or any Affiliate,
or officers or employees of the Company or any Affiliate, in existence from
time to time during your employment with the Company, (ii) interfere with or
harm, or attempt to interfere with or harm, the relationship of the Company or
any Affiliate with any person who at any time was an employee, customer or
supplier of the Company or any Affiliate or otherwise had a business
relationship with the Company or any Affiliate, or (iii) unless compelled by
law to do so, directly or indirectly, knowingly make any statement or other
communication that impugns or attacks the reputation or character of the
Company or any Affiliate, or damages the goodwill of the Company or any
Affiliate, or knowingly 


 


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take
any action, directly or indirectly, that would interfere with any contractual
or customer or supplier relationships of the Company or any Affiliate.


11.           Non-Competition. If
you resign your employment, or if your employment is terminated with Cause, for
a period of eighteen (18) months following such employment termination, you may
not and will not, within the United States of America, directly or indirectly,
without the prior written consent of the Company’s chief executive officer or
its Board of Directors (which may be given or withheld in its sole discretion),
own, manage, operate, join, control, be employed by, consult with or
participate in the ownership, management, operation or control of, or be
connected with (as a stockholder, partner or otherwise) any business,
partnership, firm, company, corporation or other entity engaged in the retail
business of women’s fashion apparel, 
accessories and related products or any other product sold or intended
to be sold by the Company or an Affiliate during your employment with the
Company.  Notwithstanding the foregoing,
your beneficial ownership after your termination of employment with the
Company, either individually or as a member of a group, of not more than two
percent (2%) of the voting stock of any publicly held corporation shall not be
a violation of this provision.


12.           Remedies.  You agree that any breach of the
restrictions provided in this Agreement would result in irreparable injury and
damage to the Company for which the Company would have no adequate remedy at
law.  You therefore also agree that in
the event of a breach (or any threat of breach) that the Company shall be
entitled to an immediate injunction and restraining order to prevent such
breach and/or threatened breach and/or continued breach, without having to
prove damages, and to all costs and expenses, including reasonable attorneys’
fees and costs, in addition to any other remedies to which the Company may be
entitled at law or in equity.  The terms
of this Section shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including but not limited
to the recovery of damages from you. 
The provisions of this Section shall survive any termination of this
Agreement.  If the Company initiates
such legal action and the final judicial decision concludes that there was no
such breach or threat of breach, then the Company shall pay all of your costs
and expenses, including reasonable attorneys’ fees and costs, arising from the
Company’s legal action. In addition, the existence of any claim or cause of
action by you against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the restrictive covenants of this Agreement.


13.           Acknowledgment of Reasonableness.  You and the Company specifically agree
that the provisions of the restrictive covenants contained in this Agreement,
including the post-employment covenants regarding non-solicitation and
non-competition, are reasonable and that the Company would not have entered
into this Agreement but for the inclusion of such covenants.  You understand that the Company’s business
is nationwide, and, therefore, a nationwide restrictive covenant is reasonable.  If a court or arbitrator determines that any
provision of any such restrictive covenant is unreasonable, whether in period
of time, geographical area, or otherwise, you and the Company agree that the
covenant shall be interpreted and enforced to the maximum extent which a court
or arbitrator deems reasonable.  In
addition, you and the Company authorize any such court or arbitrator to reform
these restrictions to the minimum extent necessary.


 


14.           Company Property.  Upon your termination of employment for any
reason, you will promptly return to the Company all Company-related documents
and Company property within your possession or control.


 


15.           Release of Company and Related Entities.  Your execution of this Agreement represents
your full and final release of any claim that might be brought against the
Company or any Affiliate relating to the terms of your previous employment with
the Company or an Affiliate.


 


16.           Arbitration of Disputes.  Except as set forth in this Section, any
dispute, claim or difference arising out of or in relation to your employment
will be settled exclusively by binding 


 


 


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arbitration administered by
the American Arbitration Association under its National Rules for the
Resolution of Employment Disputes before a single arbitrator.  The arbitration will be held in New York,
New York unless you and the Company (each a “Party,” and jointly, the “Parties”)
mutually agree otherwise.  Nothing
contained in this Section will be construed to limit or preclude a Party from
bringing any action in any court of competent jurisdiction for injunctive or
other provisional relief to compel another party to comply with its obligations
under this Agreement or any other agreement between or among the Parties during
the pendency of the arbitration proceedings. 
Each Party will bear its own costs and fees of the arbitration, and
other fees and expenses of the arbitrator will be borne equally by the parties;
provided,
however,
that the arbitrator will be empowered to require any one or more of the Parties
to bear all or any potion of fees and expenses of the Parties and/or the fees
and expenses of the arbitrator in the event that the arbitrator determines such
Party has acted in bad faith.  The
arbitrator will have the authority to award any remedy or relief that a court
of the State of New York could order or grant. 
The decision and award of the arbitrator will be binding on all
Parties.  Either Party to the
arbitration may seek to have the ruling of the arbitrator entered in any court
having jurisdiction thereof.  Each Party
agrees that it will not file suit, motion, petition or otherwise commence any
legal action or proceeding for any matter which is required to be submitted to
arbitration as contemplated herein, except in connection with the enforcement
of an award rendered by an arbitrator and except to seek the issuance of an
injunction or temporary restraining order pending a final determination by the
arbitrator.


 


17.           Entire Agreement.  This Agreement constitutes your entire
agreement with the Company relating to the subject mater hereof, and superseded
in its entirety any and all prior agreements, understandings or arrangements
with the Company.


 


18.           Governing Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York.


 


19.           Understandings and Representations.  You should not sign this Agreement until
your understand its terms and conditions. 
Your execution of this Agreement represents your acknowledgement that
you have take all steps you believe necessary, including consultation with
financial and/or legal advisors of your choice, to understand this Agreement.


 


 


	
  Sincerely,

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:  

  	
  /s/ Richard P. Crystal

  	
   

  	
  Dated:

  	
  June 25, 2004

  
	
  Name: 

  	
  Richard Crystal

  	
   

  	
   

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Steven M. Newman

  	
   

  	
  Dated:

  	
  June 29, 2004

  
	
  Steven Newman

  	
   

  	
   

  	
   

  
	
  Executive Vice President,
  Merchandising

  	
   

  	
   

  	
   

  
						



 


 


 


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